An 11-Step Program to Navigating Partnerships

Commercial partnerships have become a mainstay of the pharmaceutical and biotech industries, providing funding for innovative R&D, a pathway for clinical innovation to make its way to the marketplace, products for Big Pharma's salesforces, and in many cases a healthy financial return for both partners. But how many companies can point to dealmaking as a core competency? The truth is that until recently, few companies knew how to approach alliances as a comprehensible, manageable process. That is starting to change, and we are starting to see the emergence of a relatively standard approach to partnership. That is a hopeful sign. But companies need to go further. What follows is an attempt to bring a logical structure to the process. It is designed so that the right questions—What are the options? What does my company want to accomplish? How about the other side? How would my options change with a different kind of partner?—get asked at the right stage of the process.

The model generally approaches the deal from the perspective of a smaller pharma or biotech partner, though obviously Big Pharma partners face their own set of related issues. We've made some simple assumptions: If you don't want your deal to fail, you need to do a great deal of homework, and the right time to do it is before you find yourself at the negotiating table. A deal can't be a windfall for either partner; there has to be a quid pro quo—and it's crucial to understand what your partner wants, and to know your partner well enough to allow for meaningful due diligence, if you get that far.

Alternative Partnering Models

Nothing here is set in stone. The goal isn't to get you to follow this particular timeline in lockstep, but to introduce a way of thinking about the process of partnering. Get that down and you're ready to design a strategy of your own.

1. Ask: What Do I Want?

Commercial partnerships offer a vehicle to leverage intellectual property as a way to improve health and provide additional funding for research, overhead and regulatory costs. Clinical innovation and human and scientific applications can be enhanced through commercial partnerships. Commercial partnerships can also bring strategic, operational and financial benefits to research institutions and biotechnology companies. Key benefits include:

In the early stages of thinking about partnership, it is important to ask which of these benefits is important to your company. Indeed, the analysis should cut to the most basic of issues:

» Can a commercial partnership help my organization further its mission?

» How can we effectively evaluate the viability of a commercial partnership?

» Is partnering actually the most desirable strategy?

For any partnership to succeed, there must be equal value to the other partner, which in this case would be a pharmaceutical company. Part of your effort in the earliest phases should go to understanding what benefits a potential partner is pursuing. They can include: